Knock out the three wrong rules

Exercise and reference answers

Questions

1. Question

   Three of these statements about a silent partnership deed are false.

   Choices

   1. Item

      Profits and losses are shared equally

      Correct

      Yes

   2. Explanation

      A capital ratio applies only when the deed expressly says so.

      Item

      Profits follow the capital contributed

   3. Explanation

      Interest on capital is not payable unless the deed provides for it.

      Item

      Interest on capital is paid anyway

   4. Explanation

      A time ratio applies only when the deed expressly says so.

      Item

      Profits follow time put in by each

2. Question

   Three of these statements about a partnership firm are false.

   Choices

   1. Item

      A firm may have up to fifty partners

      Correct

      Yes

   2. Explanation

      Section 4 of the 1932 Act carries the definition.

      Item

      Partnership is defined in Section 40

   3. Explanation

      Every existing partner must consent to the admission.

      Item

      A new partner joins by majority vote

   4. Explanation

      A silent deed fixes the partner loan rate at six per cent.

      Item

      A partner loan earns twelve per cent

Instructions

Tap away the three false claims about partnership rules and leave the one that holds.

Explanation